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Understanding Bequest Motives An Empirical Analysis of Intergenerational Transfers

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  • G�nther Fink
  • Silvia Redaelli

Abstract

This paper analyzes one of the major factors underlying old agents' saving and consumption decisions - the individual intentions to leave bequests. We present two simple model of altruistically motivated bequests and use data from the Health and Retirement Study (HRS) to confront the theoretical implications of the two model with empirical evidence from the survey data provided. The main findings from the data are the following: First, there is strong evidence against a strictly accidental, and in favor of intentional bequest motive for a significant share of agents aged sixty and older. Second, we find the probability to leave an inheritance is mainly driven by wealth and individual characteristics such as health, education, race and religion, but not directly dependent on the heirs' wellbeing, contradicting the standard altruistic model of bequest.

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File URL: http://www.dnb.nl/binaries/Working%20Paper%2042_tcm46-146699.pdf
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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 042.

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Date of creation: May 2005
Date of revision:
Handle: RePEc:dnb:dnbwpp:042
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Keywords: Bequest; Altruism;

Find related papers by JEL classification:

  • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
  • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy

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  1. Kotlikoff, Laurence J & Spivak, Avia, 1981. "The Family as an Incomplete Annuities Market," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 372-91, April.
  2. Gary S. Becker & Nigel Tomes, . "Human Capital and the Rise and Fall of Families," University of Chicago - Population Research Center 84-10, Chicago - Population Research Center.
  3. Roberta Gatti, 2005. "Family Altruism and Incentives," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 67-81, 03.
  4. Gokhale, Jagadeesh & Kotlikoff, Laurence J. & Sefton, James & Weale, Martin, 2001. "Simulating the transmission of wealth inequality via bequests," Journal of Public Economics, Elsevier, vol. 79(1), pages 93-128, January.
  5. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  6. Abel, Andrew B, 1985. "Precautionary Saving and Accidental Bequests," American Economic Review, American Economic Association, vol. 75(4), pages 777-91, September.
  7. Michael Hurd & James P. Smith, 2003. "Expected Bequests and Their Distribution," Working Papers 03-10, RAND Corporation Publications Department.
  8. Laitner, J. & Ohlsson, H., 1998. "Bequest Motives: a Comparison of Sweden and the United States," Papers 1998:16, Uppsala - Working Paper Series.
  9. Oded Galor & Omer Moav, 1999. "From Physical to Human Capital Accumulation: Inequality in the Process of Development," Working Papers 99-27, Brown University, Department of Economics.
  10. Martin Feldstein & Jeffrey B. Liebman, 2001. "Social Security," NBER Working Papers 8451, National Bureau of Economic Research, Inc.
    • Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier.
  11. Kotlikoff, Laurence J & Summers, Lawrence H, 1981. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 706-32, August.
  12. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
  13. Tullio Jappelli & Franco Modigliani, 1998. "The Age-Saving Profile and the Life-Cycle Hypothesis," CSEF Working Papers 09, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  14. Michael D. Hurd & James P. Smith, 1999. "Anticipated and Actual Bequests," NBER Working Papers 7380, National Bureau of Economic Research, Inc.
  15. Tullio Jappelli & Marco Pagano, 1998. "The Determinants of Savings: Lessons from Italy," CSEF Working Papers 01, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  16. Galor, Oded & Moav, Omer, 2001. "Das Human Kapital," CEPR Discussion Papers 2701, C.E.P.R. Discussion Papers.
  17. McGarry, Kathleen, 1999. "Inter vivos transfers and intended bequests," Journal of Public Economics, Elsevier, vol. 73(3), pages 321-351, September.
  18. Masson, A. & Pestieau, P., . "Bequests motives and models of inheritance: A survey of the literature," CORE Discussion Papers RP -1273, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  19. Lutz Hendricks, . "Intended and Accidental Bequests in a Life-cycle Economy," Working Papers 2133407, Department of Economics, W. P. Carey School of Business, Arizona State University.
  20. Kessler, Denis & Masson, Andre, 1989. "Bequest and Wealth Accumulation: Are Some Pieces of the Puzzle Missing?," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 141-52, Summer.
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Cited by:

  1. Stefano STAFFOLANI & Enzo VALENTINI, 2006. "Bequest Taxation, allocation of talents, education and efficiency," Working Papers 248, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  2. repec:dgr:kubcen:200934 is not listed on IDEAS
  3. Vaz, Thalita A. & Machado, Sérgio J. & Bortoluzzo, Adriana B., 2011. "Estimation of Conversion Rates into Annuities: A Brazilian Perspective," Insper Working Papers wpe_249, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
  4. Renneboog, L.D.R. & Spaenjers, C., 2009. "Where Angels Fear to Trade : The Role of Religion in Household Finance," Discussion Paper 2009-34, Tilburg University, Center for Economic Research.
  5. Staffolani, Stefano & Valentini, Enzo, 2007. "Bequest taxation and efficient allocation of talents," Economic Modelling, Elsevier, vol. 24(4), pages 648-672, July.
  6. John Ameriks & Andrew Caplin & Steven Laufer & Stijn Van Nieuwerburgh, 2011. "The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Public Care Aversion from Bequest Motives," Journal of Finance, American Finance Association, vol. 66(2), pages 519-561, 04.

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